United States: New York Employers – 2013 Year In Review And Looking Ahead To 2014

"Many people look forward to the new year for a new start on old habits." While the author to this famous New Year's quote remains unknown, that certainly doesn't make it any less true, including for employers. We hope that, this year, you will buck this trend and actually start doing things a little differently – take a fresh look at that handbook, revisit that non-compete agreement you give to employees that, admittedly, you just cut and pasted off the internet years' ago, perform that overtime exemption analysis you've been putting off forever . . . .  It's never too late to get your affairs in order, and the New Year provides you with the perfect opportunity to do so. And for those of you with employees here in New York, and especially in New York City, we implore you do so as the laws, as you'll see below, are once again a changin.

Below we look back at the year that was and discuss the year that will be in New York. We hope that you have a great 2014 and look forward to continuing to bring you the latest and greatest in updates here on Employment Matters.

I.  Wage and Hour: More More More

  1. Minimum Wage – On December 31, 2013, New York's minimum wage rate increased from $7.25 to $8.00 – the first raise in 4.5 years. This rate will jump again in 2015 ($8.75) and 2016 ($9.00). Employers paying employees at or very close to the minimum wage rate will see increased costs, including when spread of hours or split shift pay is due. The same will hold true for employers employing individuals exempt under the Federal Fair Labor Standards Act, but not under the New York Labor Law, who are therefore entitled to overtime pay at 1.5 times the statutory minimum wage rate (or from $10.875 to $12.00). These increases also mean (generally) increases in tip credits, meals or lodging allowances, uniform maintenance pay, call-in pay, etc., and employers will also need to bump up certain exempt employees' pay to meet the new $600 minimum weekly salary threshold.
  2. Pay Notices – The minimum wage increase provides the perfect segue to remind employers that the next round of New York Wage Theft Act annual pay notices are due by February 1, 2014. Despite some state legislators' best efforts to repeal the law this past year, employers must still provide these notices to all employees, regardless of exemption classification status, job title or role, and in some cases, they must be provided in other languages.
  3. Paid Sick Leave – Starting in April, many City employers will also have to provide their employees with up to 40 hours of paid sick time via the Earned Sick Time Act. More than 1.6 million City employees currently do not receive this benefit. For those that already do, employers must make sure that their paid leave programs comply with the rest of the Act's requirements (i.e. provide for a limited carryover of accrued paid sick time from year to year; extend to all employees, etc.).
  4. Wage Deductions – The New York Department of Labor finally released its regulations interpreting New York's amended wage deduction law in October. You can read our five takeaways from those regulations here. As you'll see, the NYSDOL interprets the law narrowly, limiting permissible deductions to those falling within only certain limited categories, and they now require employers to obtain written authorizations from, and in certain cases enter into written agreements with, their employees before taking the deduction.
  5. Tip Sharing – Last summer, New York's highest court – the Court of Appeals – held that employees not possessing significant or meaningful authority over other employees are eligible to participate in tip pools under New York's Labor Law. The case involved Starbucks' decision to tip its baristas and their shift supervisors, but not the assistant store managers. The Court of Appeals was tasked with deciding whether it was okay for the shift supervisors to receive tips and for the assistant store managers not to receive tips. While not directly answering whether the specific positions at issue were tip pool-eligible, the court noted that it's all about job duties, not job titles, and while the position might require the employee to serve patrons, it may also require them to supervise others, and therefore, the relevant question is whether the employee's supervisory responsibilities become so substantial or meaningful that the employee "can no longer fairly be characterized as an employee similar to general wait staff." But the court's analysis did not end there; it finished: even if an employee was tip pool-eligible, an employer may still exclude that employee from the tip pool without violating the Labor Law.
  6. Class Actions – Sometime in 2014, we expect the Second Circuit to address the impact of the U.S. Supreme Court's 2013 Comcast decision on wage and hour class action lawsuits. As we wrote about in October, the future of an employee's ability to maintain a class action in New York federal courts may be at stake if the court finds that a class should not be certified where the plaintiff will have to rely on individualized proof to prove each class member's damages.
  7. Liquidated Damages – In 2013, the Second Circuit finally concluded that the New York Labor Law does not require courts to impose a liquidated damages award of 100% (instead of 25%) of the total unpaid wages owed to the employee that accrued before April 2011. This certainly reduces an employer's exposure in employee wage and hour lawsuits. However, the question does remain open in the state courts with only one trial court reaching the opposite conclusion to date.

II.  The Human Rights Laws Expand Yet Again

  1. Protection of the Unemployed – The New York City Human Rights law enshrined "current unemployment status" as its newest protected class leaving employers exposed to yet another potentially costly type of lawsuit under the City law.  We expect to see the first written opinion addressing this new type of claim for discrimination sometime in 2014.
  2. Protection of Unpaid Interns – We also expect legislation extending the City and State Human Rights Law's protections to cover unpaid interns to be given a serious look in 2014. The push comes on the heels of a decision refusing to apply those statutes' protections to an unpaid intern claiming that she had been sexually harassed.
  3. Gender Expression – for the sixth straight year, the New York Senate failed to pass a law prohibiting employers from discriminating on the basis of an individual's gender identity. Will 2014 be the year? We shall see.  The City law meanwhile, already provides this type of protection.
  4. Prohibition Against Decisions Based on Credit History – As usual, in 2013, both bodies of the State legislature introduced bills seeking to reign in an employer's ability to use a job applicant or employee's credit rating history in connection with a job decision. The State Assembly passed its version of this bill, while the Senate is set to debate their version sometime this month.  We would expect the City Council to introduce similar legislation in 2014.
  5. Pregnancy/Childbirth Accommodations – Effective January 30, 2014, the City law will prohibit City employers from discriminating against employees who are pregnant or who have a medical condition related to pregnancy or childbirth and will require employers to provide a reasonable accommodation to such workers. These accommodations may include "bathroom breaks, leave for a period of disability arising from childbirth, breaks to facilitate increased water intake, periodic rest for those who stand for long periods of time, and assistance with manual labor, among other things." No accommodation is required however, if it imposes an "undue hardship" on the employer (which we explain in more detail here).  Employers will also have to notify new employees about the law and add a new poster in the workplace.
  6. Disability Reasonable Accommodation – As we reported in October, the New York Court of Appeals refused to create a bright-line rule eliminating requests for indefinite leave as a possible reasonable accommodation for a disability under the New York City Human Rights Law. Instead, the employer would have to show that such a request poses an undue hardship.
  7. Continued Application of Liberal Standard under the City law – No less than three times this year the Second Circuit reversed summary judgments for employers because the District Courts did not interpret the New York City Human Rights Law's liberal standard, well, liberally.  The message continues to be: summary judgment under the City law ≠ easy.  Those decisions are available here, here and here.

III.  Administrative Agencies Remain Busy As Well

  1. Independent Contractor Misclassification –2013 saw New York become the 15th state to partner up with the USDOL to further combat employer misclassification of independent contractors pursuant to the USDOL's Misclassification Initiative.  Under the Memorandum of Understandings between the USDOL and NYSDOL and the USDOL and the NYS Labor Bureau, the agencies will share information and coordinate their efforts in certain ways to reduce employer misclassification.
  2. Unemployment Insurance – The Federal Unemployment Insurance Integrity Act of 2011 required all states to bolster their unemployment laws by October 2013 – a directive New York complied with in the form of various changes to its existing unemployment insurance laws, including by requiring employers to provide timely responses to benefit claims or forfeit their ability to later contest those claims or otherwise rid themselves of the resulting account charges. The changes affect employees as well as under certain circumstances, they may be ineligible to receive benefits in weeks they received severance pay from an employer.  Other important changes are identified on this NYSDOL Fact Sheet.
  3. Workers Compensation – The Business Relief Act implemented many amendments to the Workers' Compensation Law, including by, among other things, (i) dramatically simplifying the employers' workers' compensation assessment and billing process, effective January 1, 2014; (ii) closing the 25-a Fund, which according to the WCB "will reduce the annual employer assessment by approximately $300 million, producing real savings for businesses, with no impact on injured workers"; and (iii) increasing the minimum weekly benefit to $150 from $100 to ensure adequate compensation to low wage workers.

So that is all for now.  We will continue to monitor the legislature, courts and administrative agencies throughout 2014 and report any noteworthy activity your way.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael S. Arnold
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